Decoding China: How to deal with the Houthis?

In response to the Houthi armed forces' attacks in the Red Sea, China has become increasingly tough in its rhetoric. Although Chinese ships have not been attacked, rising shipping costs caused by the crisis on the Red Sea route have hit China's already weak domestic economic growth.

Houthi armed forces attack merchant ships in the Red Sea, threatening international shipping

(Deutsche Welle Chinese website) China has long been trying to reach a consensus with the Houthis. Now, Beijing is clearly losing patience. According to Reuters, a Beijing government representative made a clear appeal to Iran to restrain the Houthi armed forces from attacking Red Sea shipping.

Reuters quoted an unnamed Chinese government source as saying, "If China's interests are harmed in any way, it will affect our business dealings with Tehran." Iran should urge the Houthis not to jeopardize international logistics. Chinese Prime Minister Li Qiang talked about the need to maintain "stable and smooth" international supply chains during the World Economic Forum in Davos in mid-January.

On the military front, China has shown restraint against the Islamic militant group Houthis. The United States and its allies have launched multiple attacks on Houthi positions, but China has not participated in military operations. In response, the Houthis previously stated that Chinese merchant ships can pass freely and safely through the Red Sea. A spokesman for the Houthi armed forces confirmed the news to the German Press Agency because ships from China will not dock at the ports of the "enemy country Israel"; other ships related to Israel or heading to the country are "banned" from passage.

The United States launches "Red Sea Escort" to prevent Houthi armed attacks in the Red Sea

China's economy has been severely affected

Although Chinese merchant ships have not been attacked, Chinese-made products thousands of kilometers away have been affected by the growing tensions. A large portion of China's exports are handled by foreign shipping companies. The Middle East Institute, a think tank, pointed out that about 60% of all products exported from China to Europe are transported through the Red Sea and Suez Canal. If the Red Sea route is broken, Chinese ships will have to detour around the Cape of Good Hope at the southern tip of Africa, which will extend the transportation time by two to three weeks. This will also lead to a tight supply of global containers and push up transportation costs.

Therefore, the Houthi armed forces’ attacks in the Red Sea have had a huge economic impact on China. Johann Fuhrmann, director of the Beijing office of the German Adenauer Foundation, told Deutsche Welle: "Beijing is facing huge challenges in supply chains and global trade. Not only is the route around the Cape of Good Hope extended, but container prices are also rising rapidly. . All this is happening at a time when China is vigorously developing exports."

For decades, China's real estate industry has been regarded as a growth driver, but recently large listed real estate companies have encountered difficulties one after another. To boost the economy, the Chinese government is relying on export trade. For example, SAIC, one of China's largest automobile manufacturers, announced that 14 ocean-going carriers will join its logistics fleet in the future.

In addition, China also relies on energy supplies from the Middle East and Africa. Nora Kürzdörfer, a political economist at the Institute for Global and Regional Studies (GIGA) in Hamburg, Germany, told Deutsche Welle that after the outbreak of the crisis, Chinese shipping companies' transportation costs and insurance premiums increased significantly.

Since Houthi rebels first attacked cargo ships in December, freight rates for standard containers from China to Europe alone have more than doubled to about $7,000, news agencies reported.

Israeli ship "Galaxy Leader" seized by Houthi armed forces

China is unwilling to intervene

Kulzdorf said that in order not to damage China's economic and diplomatic interests in the region, China pursues a policy of non-interference. But the Beijing government continues to point out that the United States is also responsible for the current instability. “This strengthens cooperation with regional partners and allies such as Iran.”

Overall, Beijing’s political goal is to establish itself as a new ordering force in the region, according to Forman of the Adenauer Foundation. Beijing demonstrates this when it mediates between Saudi Arabia and Iran. The two major rivals in the Middle East restored diplomatic relations in the spring of 2023 after a seven-year severance of diplomatic ties.

At the same time, Beijing has repeatedly emphasized the sovereignty of other countries and presented itself as a peaceful force. "Beijing claims that the actions of the United States and its allies have destabilizing effects not only in Yemen but throughout the region." Foreman said that China sees itself as an advocate for countries in the global South, and "expressions of solidarity with the Palestinians are also consistent with this."

At the end of November last year, the Chinese government issued a position paper on resolving the Palestinian-Israeli conflict, which called for a "comprehensive ceasefire and cessation of war," "effective protection of civilians," and the provision of humanitarian assistance to the people of Gaza. It did not mention the terrorist attack on Israel launched by the Islamic radical Hamas on October 7, which killed about 1,200 people and took more than 200 people hostage. Unlike Germany, the European Union and the United States, China does not list Hamas as a terrorist organization.

Lack of overseas military experience

Forman said: "It is worth noting in this regard that Israel basically maintains good relations with China and is also regarded as an ally of the United States." Kurtzdorf also held the same view: "Although China maintains trade with Israel relations, but is more inclined to support Palestine in rhetoric and diplomacy, which is also to compete with the United States." However, Kulzdorff believes that the Beijing government also has some very practical considerations, so China also advocates ending the Gaza war as soon as possible to avoid the Red Sea The regional situation has further escalated.

Forman noted that China had made only limited preparations for such a scenario: "Beijing has relatively little actual military experience overseas and therefore displays a low profile and caution. Instead, it prefers to stand aside while other countries engage in military operations. And then criticize it. However, it remains to be seen whether this calculation is sustainable in the long term.”